Chinese iron ore futures are getting hosed, losing nearly 20% last week

Photo by Lam Yik Fei/Getty Images

Iron ore futures in China were hosed on Friday evening, continuing the form seen earlier in the week.

The January 2017 iron ore future on the Dalian Commodities Exchange finished Friday trade at 535.5 yuan, down a whopping 4.63% for the session.

From the high struck on Monday last week, the price has now collapsed by over 18%.

The sharp unwind in futures suggests that spot markets may come under pressure on Monday.

According to Metal Bulletin, the spot price for benchmark 62% fines slid by 1.03% to $72.79 a tonne on Friday, giving back around two thirds of the gain seen on Thursday.

Analysts at group put the decline down to renewed weakness in rebar futures on Friday.

“Rebar futures regained downward momentum during the day, which led to bearish sentiment in the spot market,” Metal Bulletin said.

For the week the benchmark price lost 8.8%, less that half the decline registered in futures markets.

On that one metric alone it suggests that risks to spot prices are clearly slanted to the downside right now.

Mirroring the weakness in iron ore futures on Friday evening, rebar and coking coal futures traded on the Shanghai Futures and Dalian Commodities Exchanges slid by 3.09% and 4.15% respectively.

Trade in Chinese commodity futures will resume at Midday AEDT.

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